Retail sales rise 0.9% in April, a sign of economy

Sales at U.S. retailers rose by a solid 0.9% in April, signalling the economy still has a lot of vigor. Auto dealers led the way, but most major retail categories posted gains.

Economists polled by The Wall Street Journal had predicted a 1% advance.

The increase in sales in March was raised to 1.4% from an original 0.7%, the government reported Tuesday.

Retail sales are a big part of consumer spending and give clues on the strength of the U.S. economy.

Retail sales increased by 0.6% last month after adjusting for a 0.3% increase in inflation in April. Sales increased faster than inflation in March.

Inflation is a big concern. The economy could be hampered by rising prices, which could cause consumers to forego some purchases and stop buying. Consumer spending accounts for about 70% of U.S. economic activity.

The Federal Reserve is moving to jack up its interest rate in order to try to tame inflation. That could slow the economy.

Americans are still spending enough to keep the economy growing, but the future is looking more uncertain.

Auto sales were up 2.2% last month and reversed a sharp decline in March. Sales have been up and down for the past year due to ongoing computer chip shortages that have hampered production.

In April, sales at gas stations fell by 2.7% after prices at the pump fell. They had surged in March after the Russian invasion of Ukraine.

Retail sales increased by 1% last month, if gas stations and auto dealers are set aside. Sales at most other retailers increased in April.

The retail report shows that the bars and restaurants are the only service-providing business tracked by the economists. Sales tend to increase when the economy is strong and Americans feel confident.

Restaurant sales went up by a healthy 2% last month. Economists predict that Americans will shift their spending toward services and away from goods as they leave their homes more to entertain themselves or travel.

In April and March, higher retail sales are a good sign for the economy.

"Look ahead: Never bet against the U.S. consumer is a good adage to bear in mind throughout my 20+ years in the markets," said Paul Ashworth, chief economist at Capital Economics.

The speculation that the U.S. economy is in danger of a recession is badly misplaced, given the strength of consumers. Market reaction: Dow Jones Industrial Average DJIA and S&P 500 SPX rose sharply in Tuesday trades.